Look! Up there in the sky! It’s the amazing SpaceX Falcon Heavy rocket launching into space! Even more amazing, the two booster rockets return to earth and steer themselves right back onto the launching pad, landing in perfect synchronization!
Welcome to the Elon Musk Carnival Show! It’s all designed to showcase something that will distract you from the fact that Tesla Inc (NASDAQ:TSLA) cannot roll cars off the production line and is burning billions of dollars!
Tesla stock is ridiculously high, despite the fact that the company again promised that it would really, really be producing 5,000 cars per week by now. Except that goal kept getting revised over and over. By the end of March, Tesla was supposed to be putting out 2,500 cars per week and 5,000 by the end of June, and those both got revised in the last conference call.
Well, as of the end of last week, TSLA was putting out 1,052 cars per week. So will Tesla hit 2,500 per week by the end of March? When pigs fly.
Oh, meanwhile, the Chevy Bolt from our friends at General Motors Company (NYSE:GM) has not only manufactured but actually sold over 23,000 cars. Not only that, Tesla fans who pre-ordered their Model 3 have shoved $35,000 into Musk’s greedy little hands and now get to drive their cool car sometime in 2019. Meanwhile, if you want a Bolt, you get a Bolt. Now.
In other words, competition is here! Not only that, as the Model 3 slowly gets put together, more and more electric vehicles are coming to market from Nissan Motor Company Ltd (ADR)(OTCMKTS:NSANY), Audi AG (OTCMKTS:AUDVF), Kia, Hyundai and Jaguar.
Suddenly panicked, Tesla has now decided to bypass the testing protocol for Model 3 cars. Imagine putting together a complex vehicle like this and saying, “Testing? Meh. Gotta get the cars out!” How many complaints do you expect we’ll see when the time comes? Lots.
It’s already begun. If you check out some fan websites, the complaints are rolling in. In fact, the complaints are so bad that it appears at least half the cars have hardware problems, and all have software problems.
There’s also the fact that the $35,000 price point is misleading. All things considered, the final price is going to come in much higher. The idea that this is some solution to average consumers seeking electric cars is folly.
Several other automobile commentary websites believe Tesla stock is ridiculously overvalued especially because the factory simply will be unable to put out more than 3,000 cars per week. That’s all the service centers can handle.
Check out this amazing chart. As Tesla delivers more and more cars, the net loss increases.
This is just nuts. Meanwhile, Musk basks in the glory of his con-artist empire.
Bottom Line on Tesla Stock
Sure, Tesla stock has been rising. So don’t pay any attention to the man behind the curtain. But this will all fall apart at some point, and you don’t want to be long when it does.
If you are crazy enough to own Tesla stock, set stop losses and don’t buy on dips. You’re better off cashing out and moving on.
Lawrence Meyers is the CEO of PDL Capital, a specialty lender focusing on consumer finance, and is the Manager of The Liberty Portfolio at www.thelibertyportfolio.com. He does not own any stock mentioned. He has 23 years’ experience in the stock market and has written more than 2,000 articles on investing. Lawrence Meyers can be reached at TheLibertyPortfolio@gmail.com.
